(a)In this section:
(1)Payment means a payment that a trustee may
receive over a fixed number of years or during the life of one or more individuals
because of services rendered or property transferred to the payer in exchange
for future payments. The term includes a payment made in money or property
from the payer's general assets or from a separate fund created by the payer. For purposes of subsections (d), (e),
(f), and (g) of this section, the term also includes any payment from any
separate fund, regardless of the reason for the payment; and
(2)Separate fund includes a private or commercial
annuity, an individual retirement account, and a pension, profit-sharing,
stock-bonus, or stock-ownership plan.
(b)To the extent that a payment is characterized as interest, a dividend, or
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(a) In this section:
(1) Payment means a payment that a trustee may
receive over a fixed number of years or during the life of one or more individuals
because of services rendered or property transferred to the payer in exchange
for future payments. The term includes a payment made in money or property
from the payer's general assets or from a separate fund created by the payer. For purposes of subsections (d), (e),
(f), and (g) of this section, the term also includes any payment from any
separate fund, regardless of the reason for the payment; and
(2) Separate fund includes a private or commercial
annuity, an individual retirement account, and a pension, profit-sharing,
stock-bonus, or stock-ownership plan.
(b) To the extent that a payment is characterized as interest, a dividend, or
a payment made in lieu of interest or a dividend, a trustee shall allocate the payment to income. The trustee shall allocate
to principal the balance of the payment and any other payment received in
the same accounting period that is not characterized as interest, a dividend,
or an equivalent payment.
(c) If no part of a payment is characterized as interest, a dividend,
or an equivalent payment, and all or part of the payment is required to be
made, a trustee shall allocate to income ten percent of the part that is required
to be made during the accounting period and the balance to principal. If no
part of a payment is required to be made or the payment received is the entire
amount to which the trustee is entitled, the trustee shall allocate the entire
payment to principal. For purposes of this subsection, a payment is not required
to be made to the extent that it is made because the trustee exercises a right
of withdrawal.
(d) Except as otherwise
provided in subsection (e) of this section, subsections (f) and (g) of this
section apply, and subsections (b) and (c) of this section do not apply, in
determining the allocation of a payment made from a separate fund to:
(1) a trust to which
an election to qualify for a marital deduction under section 2056(b)(7) of
the Internal Revenue Code of 1986, as amended, has been made; or
(2) a trust that qualifies
for the marital deduction under section 2056(b)(5) of the Internal Revenue
Code of 1986, as amended.
(e)
Subsections (d), (f), and (g) of this section do not apply if and to the extent
that the series of payments would, without the application of subsection (d)
of this section, qualify for the marital deduction under section 2056(b)(7)(C)
of the Internal Revenue Code of 1986, as amended.
(f) A trustee shall determine the
internal income of each separate fund for the accounting period as if the
separate fund were a trust subject to the Uniform Principal and Income Act.
Upon request of the surviving spouse, the trustee shall demand that the person
administering the separate fund distribute the internal income to the trust.
The trustee shall allocate a payment from the separate fund to income to the
extent of the internal income of the separate fund and distribute that amount
to the surviving spouse. The trustee shall allocate the balance of the payment
to principal. Upon request of the surviving spouse, the trustee shall allocate
principal to income to the extent the internal income of the separate fund
exceeds payments made from the separate fund to the trust during the accounting
period.
(g)
If a trustee cannot determine the internal income of a separate fund but can
determine the value of the separate fund, the internal income of the separate
fund is deemed to equal at least three percent of the fund's value, according
to the most recent statement of value preceding the beginning of the accounting
period. If the trustee can determine neither the internal income of the separate
fund nor the fund's value, the internal income of the fund is deemed to equal
the product of the interest rate and the present value of the expected future
payments, as determined under section 7520 of the Internal Revenue Code of
1986, as amended, for the month preceding the accounting period for which
the computation is made.
(h) This
section does not apply to a payment to which section 30-3136 applies.